tv Key Capitol Hill Hearings CSPAN November 9, 2013 12:30am-2:31am EST
business. and businesses have responded. after a decade in which many jobs left the united states to go overseas, now we are seeing companies starting to bring jobs back because they're seeing the advantages of being located here. catter pillar is bringing jobs back from japan. ford is bringing jobs back from mexico. after locating plants in other countries like china, intel is opening its most advanced plant here in the united states. and there are a whole range of factors involved. people are looking at lower energy costs here, stability, the increased productivity of our workers. all these things are adding up. and people are saying, why would we want to be outside the world's largest market when we can get our products made effectively here and as a great platform from which we can
export to all around the world? >> welcome back. we are live in cushing, oklahoma this morning for today's "washington journal." dubbed thems the pipeline capitol of the world. there are more than 300 storage tanks there that dot the land with the capacity to store oil reaching 80 million barrels. we are live from enbridge's tank farm in cushing joined by russell evans, an energy economist at oklahoma city's university business school. let's begin with the history of cushing in the oil industry. how did it all start? >> going all the way back to the start of cushing, we're sitting here today in really indian territory. and at the time that the territory was opened for homesteaders, a gentleman william little established his
160 acre homestead here in the cushing area. and recognized that it was sufficiently far from the nearest city and set aside 80 acres to develop a town. the petition was granted and named after the private assistance of the post master general at the time. and so was the start of cushing, oklahoma, in 1891. t was a few years later that cushing, really oil history took off from there. >> that began in 1912 with the discovery of oil at the cushing oil field. what happened then? >> so a lot of oklahoma's oil's history is tied to the oil in pennsylvania. a lot of oklahoma is really -- their formidable characters transitioned from pennsylvania to oklahoma. certainly in this case in the cushing oil fields when thomas b slick, appropriately named
perhaps, drove a wild cath well here what would be to our north adged east this morning, and opened up a gusher that was the first of what would become one of the largest oil fields at the time. it was the first in a series of wells that were successful. 45 out of the next 46 wells drilled were successful. and became prominent in the 1914, 1918 period, coin siding with large energy demands from world war one. >> and then you saw the rise of refineries in the area. why was that? >> because production was just so great relltiff to what was able to be used at the time. you had the oil fields blossoms say 1914-1918 period. at its peak producing 300,000 barrels a day accounting for almost one in every five barrels produced in oklahoma and almost 5% of total u.s.
marketed production. it was really just a field.cant booming oil you often think about it, i think about it in modern accounts of what north dakota is experiencing. think about this boom in cushing, as we have had previous successful fields to our north and east between cushing and tulsa, and so as the boom moved its way really became a drilling exploration focused town. the production just far outpaced what could be consumed and it became a gnat ral thought to begin building storage facilities, pipeline gathering facilities, and that so the nascent stages of the nod rn infrastructure that sits behind us this morning. host: what part does it play today in the oil industry?
guest: the cushing hub is still violetly important. you think about -- vitally important. think about it, it is a marketplace, it is the marketplace, the benchmark price setting place for a barrel of west texas intermediate crude. it is a blending station where operators like enbridge and others can meet the demands of their downstream users, the refiners that are refining crude oil into jet fuel, diesel fuel, refined gasoline, asfault and other products. they demand a very specific blend of crude into that process so cushing serves the critical blending station to get those crude inputs measured just right and sent downstream to consumers. and it's an important storage facility. as you noted earlier almost 80 million barrels of storage capacity, maybe 35 to 45 million barrels currently on site.
think about that in relation to the strategic petroleum reserve hat has the capacity somewhere and the storage facility stands out as one of the largest storage facilities -- the largest. >> what is west texas intermediate? is that the only type of oil that we're seeing in cushing? what other type of crude oil is coming to that area? >> i'm going to embarrass myself in front of your viewers. but basically it comes in a couple of varieties here. heavy and light, referring to . s ability to really flow it's a measure of density. so a heavy oil is darker, sort of a mollasssass color, would sink in water. a light oil is yellowish, less dense, different viscosity measures. it would float on water. then you have a sour and sweet
which rougher to the sulfur content of the fuel. sweeter crude oil has a lower sulfur content. a sour crude has a higher sulfur content. so west texas intermediate is a particular sort of benchmark of crude oil that has plark characteristics both in terms of its viscosity as well as sulfur content. so this is one type. we think about the fuels that often get discussed about in canada. these are much heavier fuels. these tar sands fuels. we think about louisiana light sweet crude. we have other markets for other types of fuels. but in general, the west texas intermediate serves as the u.s. focal point benchmark price of what a barrel of west texas intermediate crude sells for right here in cushing, oklahoma, is the barometerer or u.s. oil markets, and helps influence the price of some of those other types of crude as well. >> so west texas intermediate
coming from the western part of the state in the permian basin. we've heard a about the balken shale up in north carolina. what is happening in our country on the -- north dakota. what is happening in our country on the production side? >> i think we're going to see that same dynamic response on the infrastructure side. it's really -- to really connect the field of production to the end users. what we've had right now is historicically cushing -- historicically gulf coast refineries would get their product from offshore production, a little from southern onshore production but from the permian basis, west texas intermediate and other forms of crude would come into cushing, oklahoma, be blended and then distributed north from the mid continent, which is texas, oklahoma, mississippi, louisiana, kansas area, north into the upper midwest into chicago and other areas.
and the fuel would be pumped there for refining process. but as we get these big fields of production in north dakota, big fields of production in canada, big fields of production now in western nebraska and the rockies, if we can do this, we are really having to adjust how we distribute fuel from production to end consumers. so we're turning some of these -- >> what do you mean by infrastructure needs are changing? because you're sitting at one of those infrastructure hubs in our country. what needs to happen? >> so in the united states right now we have on the order of 120, 125,000 miles of pipeline. about 55 or 60,000 miles would be really trunk lines with diameter of 8 to 24 inches that really move high volumes of crude oil.
and it's by far the most efficient way, cost effective way to transport crude. what we have happening right now is in places like north akota and the balken shails, circumventing the pipeline struct you are and they are taking fuel directly to refineries in the upper midwest by truck, by train, any way that they can get it there. so that displaces some of the demand for fuel coming from cushing, we're reversing some of the pipelines and trying to build new infrastructure to get crude oil from cushing south to gulf coast refineries which will displace some of the imported crude that are typically useed there at those ports of import on the gulf coast and those will be reversed in flow and we will begin to export refined products into latin america and south america. so it's about building the appropriate infrastructure to connect the production to the
consumption bearing in mind that pipeline is really the safest, most cost effective way to move it in the long run. >> here's a couple of tweets. we have a democratic caller. go ahead. caller: good morning. hearing about how the oil is getting around the wells that are coming on line around there in logan county are getting oil and gas, and i know they're building some gas collection pipelines. where is the gas going? how is it getting around the country? >> in a similar process. you know, we typically thought
casually about oil or natural gas production. in reality, a lot of it is mix production. at the time that really the cushing oil field was booming in the 1914-1918 period, natural gas was sort of a newsen buy product. it was often just flared to be burned and it was sort of later that it developed in conjunction with crude oil. in either case what you're going to do is have a very small take away pipeline that would tie in from existing infrastructure to move the natural gas and crude oil into the infrastructure and system to be bought and sold and refined and processed or you're going to have storage tanks built on site and those storage tanks will then store the crude or the natural gas often the crude right now in oklahoma, and a buyer will come out and truck that from a small storage facility into a much larger storage facility where it can be put in the pipeline system,
transported, blended, and processed and distributed to consumers. host: we are live from cushing, oklahoma, this morning talking about the facility there to store oil, the largest in the country. the capacity to store up to 80 million barrels of oil, 13 companies own what are called tank farms in that area. russell evans is our guest, an economist specializing in energy from oklahoma city university. and we have a fourth line set aside for oklahoma residents. we want to hear from you as well. let me go to indiana, democratic caller. caller: i'm in yin but i'm from -- indiana but i'm from michigan. on july 25, 2010, one of enbridge's aging pipelines ptured and for 17 hours that
yielded that nasty fuel, pumped into our cal la ma zoo river. it was sickening. i was up two days later and it was laying on top. it's still laying on our river. this negligent outfit enbridge has not cleaned up yet. for 17 hours that pumped into our river because they were negligent at their control center. they were improperly staffed. they don't know what they're doing with their infrastructure. i don't know, i would like to ask your guest if he knows about marshall, michigan and .2 million gallons that spilled into our precious river? they are putting new pipelines in and won't put the sensors in to monitor it. they're cheap. they're risking our environment
to save a few bucks. host: dan, we'll ask our guest to respond but i want to let you know that brad with enbridge is going to be coming up next from their terminal there and we'll talk to him about pipeline safety and how all of that works and give him a chance to respond to what you had to say. go ahead. guest: i suspect that brad would welcome the opportunity to respond and share some of enbridge's particular expertise in distribution and managing their pipeline infrastructure. i would go back and add a little bit as the economist not as an infrastructure expert and i would note this call in conjunction with a previous tweet i believe, you know, in the united states and certainly in oklahoma, we are looking more and more at energy-based systems. oklahoma is one of the few states that is in the top five or six in the nation in crude
oil production, natural gas production and wind energy generation. so i think increasingly we're thinking about in oklahoma and nationally ways to blend our fuel consumption with traditional fossil fuels with renewables like solar, light wind, beautifuls and other options -- biofuels and other in spite of what i have no doubt yourserious concern for caller, it remains that pipeline transportation is the safest, most environmentally friendly way to transport crude oil. while enbridge would like to speak to their particular expertise in this area, in general it will be the case we will consume fossil fuel that will feed economic activity nationally and the pipeline
system will allow that to occur. host: on the issue of how oil is transported, this is from "the wall street journal. likeis happening in areas the blocking shall, other high production areas where they are trying to transport oil, get it out of there, and get it to the refineries? to build takes time the appropriate infrastructure, to comply with due diligence in terms of regulations and environmental concerns, as enbridge would speak to. fields of production develop faster than transportation. you have crude oil in place as production exploration takes off that needs to find a way to get
to the consumer. in the short run, we will train,rt or by truck, waterway -- anyway we can get it to the consumers, and refiners that require the energy in their production process. build long-term we will out the pipeline infrastructure and i will be critical to a long-term energy plan. medium termast the what we are heavily reliant on fossil fuel. cushing will remain critical to that. gas wete of some of the have between west texas , it willate prices restore balance over time.
the cushing hub and pipeline infrastructure will remain critical as we move fuels from areas of production two areas of consumption. --t: see of strengths quit is of tranquility says this shocking, we already have these pipelines and we tell canada we are not smart enough to build the xl pipeline. guest: again, i would let others speak to the concerns of that pipeline. i understand the public policy concern to develop that pipeline to tie in some of that production in western canada, to get it distributed, mixed, blended to the appropriate specifications, and i suspect that the end of the day the production will find a market
somewhere, and i suspect it will find a market here, in its nearest neighbor, the united states, and we will get a pipeline built and find a way to connect that production into consumption here, locally. i think it is only a matter of time before that happens. had environmental concerns about the development of those tar sands, any delay in connecting those fields might be a year or two i had to allow an alternative fueled to develop, to get a little more competitive, blended into our mix of energy consumption. at the end of the day, it is a considerable oil field, and i have to believe it will be tied .nto the cushing huib -- hub it really already is.
hl that is what -- host: that's what i was going to bring up. the pipeline already exists between the u.s. and canada without the keystone next -- keystone xl pipeline. guest: that is right. place in which oil is reduce in united states -- produced in the united states and canada, for that matter, has brought intoo be cushing. the pipelines exist. it is a matter of accommodating the increased production and tie user.roduction to the end- production is happening much more dynamically and faster than the infrastructure can keep up with as we try to get the crude where it needs to go. host: "the washington post" had this ad in its paper on monday
the canadian government is lobbying lawmakers here in washington through "a washington post." here is an economic question, russell evans. tax twitter -- get rid of breaks, loopholes and subsidies for big oil and coal, and create more incentives for clean energy and balance the field. question, where does that stand and how does it benefit oil and alternative energy companies? sure, countries across the spectrum of the energy industry enjoy subsidies or tax credits. we continue to develop wind
farms at a rapid pace here in oklahoma and across the midwest, and largely they are viable only because of the tax credits available. oil and natural gas companies enjoy tax credits and subsidies to offset drilling costs. i think it is a worthwhile discussion to have about the appropriate balance of subsidies, tax burden, tax ,redits across the energy mix but certainly, you know, the question of energy balance is much broader than the tax credit or the subsidy base. it is really a function of energy content and the amount of energy required to run the united states economy, and it simply is not the energy content available at this time in alternative fuels to displace the tremendous energy content that is still available from
fossil fuel. we are displacing fossil fuel with another, as we displace coal with natural gas, but we're really talking about trying to find the right mix, and the mix will evolve over time, and the subsidies and tax credits might affect the rate of evolution, but he should not affect the overall, the evolution process. host: mike is up next in suffolk, virginia, independent caller. you are on with russell evans. go ahead. .aller: yes looking at the transportation cost, as you pointed out, there ofmore damage -- danger calamities through large calamity -- barge calamities than through pipelines. we have been studying the
impact, and wea mandating what we can and what we cannot do without congressional approval. cost is moreation to bring that out of canada through a port, sale it down, bring it to louisiana and into a refinery, yet we have some people who are trying to help people that are unemployed, yet we are taxing them severely by keeping the price of crude up instead of bringing the pipelines in which would substantially reduce the cost of oil and other byproducts and reduce the tax that people have to pay at the pump. thepolitics, to me, is villain of all of this, and the
epa, people with agendas. host: russell evans? guest: there is no doubt there is a gap in transportation cost. the transportation cost gap in the role of the epa -- on the transportation cost gap, it creates opportunities. even ats such that higher transportation costs, if i could buy fuel and find a way to ship it to an east coast refinery or an upper midwest refinery, and sell it at a higher price, it gives me an opportunity to make a return just on the transportation alone. we see interesting things happening right now that are an interesting side discussion, especially with crude oil trading, that is a result of the price gap that exists.
as feeder fuels. , i have had the opportunity to do some research and examine some of the policies, some of the research efforts coming out of regulatory bodies. it is not just epa or washington, d.c., and i share some of the concerns about the quality, the objectiveness of the research coming out. he certainly hope that overall, do you certainly hope that overall they are isolated incidents, and overall i believe ist regulatory agencies really not driven either by an energy industry agenda nor an environmental agenda, but is driven by a good faith review
process to try to establish the best policies even the best available information, and i think the epa largely strides to attain that. in the little bit that i have seen, they could certainly stand some further refinement and improvement. host: russell evans, the caller talked about the price of gas at the pump and the price of oil per barrel. barrel?t around $90 a why is the price of gas high at the pump given that production in this country is on the rise? guest: the whole topic of how crude oil is price is interesting and a couple gated discussion that i am not sure i could do justice in just a few -- complicated discussion that i am not sure i can do justice in a few minutes.
term, it is demand driven. in the medium term it has to do with market structure. in the long run it has to do it overall production and extraction costs. we have seen crude oil prices move higher. brent crude is well over $100. west texas intermediate is $90. the gap is persisting despite of production. the gap is really a function of excess supply that has been bottled up in cushing, which will be alleviated a little bit as we get infrastructure put in place, and then on the refined gasoline side, there are a whole .ost of factors crude oil input is certainly one of them and a large explanatory factor. nationally, refined gasoline prices are actually coming down. we have seen several headlines last several days if you read your local newspaper.
oklahoma right now we enjoy gasoline prices under three dollars a gallon. we see that connection. the connection is not always as explicit as you think it should be given the short run and long- run dynamics affecting crude oil pricing and a myriad of factors including environmental concerns, pacific blending that has to take place, refining capacity -- when refiners come off-line for maintenance -- all of those factors impact the place of refined gasoline. -- price of refined gasoline. the connection is not always clear as consumers would like it to be. quick in always as transparent as you hope it would be or think it should be. twitterother viewer on wants to know, can we break away from the worldwide price of oil
with our own the u.s. advanced fossil fuel infrastructure? guest: it is an interesting question. i think west texas intermediate prices will come back in balance with brent crude prices. remember that west texas intermediate is slightly a higher grade and normally trades at a slight premium at about one dollar or two dollars a barrel. it currently trades at a discount. my read of the markets going forward over the next 10, 20, 30 years, is that the official trade is still in place, in particular on the east coast and gulf coast, but on the east coast in particular, to import overseas. as long as the infrastructure is in place and the transportation costs are still consistent with getting fuel from european
markets into the east coast, i suspect it will continue to use that as their primary fuel source for refining purposes. host: finish your thought. guest: it is much more likely that we will continue to import the eastm europe into coast and then export refined products from the gulf coast into south america, but the markets and the prices will remain linked. and we talk about energy independence, i do not think we envision cutting off entirely out crude oil exports. conversation is happening here as our camera is like in cushing, oklahoma, considered the largest storage facility of oil in the country. of can see that google image tank farms, and there are 13 companies that operated those in
cushing, oklahoma. jill is an independent -- joe is an independent. caller: good morning. i live four miles from that tank farm you are showing. i have a pipeline that runs across my property. i have lived here for over 20 years and i have never had a problem. none of my neighbors have had a problem with pipelines leaking or anything. what i wanted to say was the biggest problem is they are and if youo death try to build a refinery right now, the regulations are so stringent that if they started today, by the time they got a refinery finished, they would be regulated out of business. they cannot keep up with the regulations. i understand that prior to the
election, just a few weeks prior to the election, there were 300 and 90 different regulations placed on the oil and coal industry. , wepeople here in cushing are in a huge boom because of the building of new tanks, and built from are being people all over the united states, and the economy that it has pushed up is unbelievable. host: what is it doing to the local economy, joe? caller: is fantastic. the housing is full. it is not just people here locally or from the state of oklahoma. they are from all over the country. consequently, i would say the money they are paid, and they are paid very well, is not only benefiting cushing, but people all over the united states.
economic's take that point, russell evans. guest: to the regulation point, i emphasize with policymakers that have tried to balance the need for energy development with the needs for safety. i speak at the state capitol, and that washington -- in washington, d.c., dealing with a stakeholders were cut -- workshop or with our delegation, i joke that my job is the easy job -- i generate a report and try to spark a discussion, but someone on the other side of the table has to make policy, rules and regulations, and i have emphasized the balance that joe has talked about, the experience that he has seen, and the safety that is there, and wary that the balance is off in one direction or the other. callers have indicated that the balance is off in the
other direction. it is a difficult question. there is no doubt, as i drove in this morning from oklahoma city, you could just see several wells being drilled. you see the platforms there. you see pipelines, pipe storage facilities, pipelines waiting to be installed, infrastructure added to our existing lines, and there is no doubt areas like cushing are enjoying the economic reality of having the development of current. point, to be sure, housing, restaurants, local goods and services, cushing is certainly enjoying the economic reality of having the expanding tank farms, the facilities, the rental payments to land owners -- it is all significant to oklahoma, to cushing. on twitter, long-term
costs are based on extraction and production -- environmental costs have to add something, how much? guest: if only we knew the right answer, it would be easy to identify the official price. the official price should reflect the production cost, the extraction cost, and any environmental cost, spillover costs that occurs as a result of the production of fuel, and the user cost associated with using a barrel of depleted resource that will not be available for future generations. ofn we think about the price a barrel of crude oil, i am always asking my energy students to think about this, when we look at the prices, do we believe it is the an attempt only efficient price that would cost, andvironmental
the user cost, and it is a fantastic question that if only we knew the answer to forming the right policy would be easier. host: john in winter haven, florida. independent caller. to commentanted about the keystone pipeline and why it is not being built and why the president is blocking it is the oil that is being rail, ands coming by the rail companies do not want to carry it, and who is the rail company? burlington northern, owned by the president's friend, warren buffett. would you comment leaves? not havecertainly do the expertise required to comment on the president's social circle and the dynamics of how that would influence policy, but to the broader comment, there is no doubt that
the fuel will be produced. it is a tremendous source of energy. the energy content in those oil fields in western canada is tremendous. usersl be produced to and in one way -- it will be produced and given to end-users in one way or the other. knew when the pipeline, the formal approval process would occur, but i have to imagine that it happens at some point. it is too vital for the overall infrastructure picture not to develop at some point. host: news reports are the administration is waiting for a final review from the state department on the keystone xl pipeline, but russell evans, how long has the united states been importing oil sands from canada? know precisely, to be frank, but as you noted
earlier, we do know that we are already importing some of that oil. we have the infrastructure in place to get some of that oil from fields of production in here to cushing to be blended and distributed. it is really a question about accommodating the scope of production and accommodating how that accommodates the production inthe bakken shale, or here traditional places. as you think about that it is a question of how you tie that in efficiently and get it where it needs to go. host: russell evans, energy specialist with oklahoma university's business school. thank you for your time. guest: it is fantastic. a beautiful morning here in cushing, oklahoma. cold, solooks a little thank you for hanging with us. guest: thank you. host: next we will talk to brad shamla from enbridge, and he
will take your questions about how pipeline infrastructure works -- how it is built, maintained and monitored, and first, a little more from our visit to pushing. we talked to brett anderson about the price of oil over the years. [video clip] i can remember it at three dollars a barrel. it was an interesting thing. it peaked at about $30 or $40 a thenl in 1981 or 1982, and it went down as recently as 1999 -- this is not what many people realize -- oil fell to less than $10 a barrel. 1999, just 13, 14 years
ago. it was less than $10, and then $140, andd up to drifted back to around where it is today. producer, if it is $100 a barrel, he does not get $100, he has to pay the royalty, which isd to be 1/8, and now it 3/16, or 25%. it has to pay for expenses and for taking care of that big monster, and if anything breaks down, you have to pay for that too. it is a tough business, but it is a good business. host: our coverage from cushing, oklahoma, it can use this morning where 13 oil companies are in the business of transporting and storing oil from all over the country. millions of barrels of oil get
pumped out of cushing, and with enbridge. shamla from let's begin with your company, enbridge, and what you do in transporting oil. how does it work? greta.good morning, our money is involved with the transportation of crude oil and we are also involved with natural gas gathering and redistribution and green energy. on the pipeline side, with with wood pipelines in particular, we provide the important link between the production area, the fields and the end-users -- the refineries. that is the link that we provide. we do take the oil near the source in the production field. we do move it through the system with a series of pump stations moving through our pipeline stations, through cushing here,
and on to the end refinery. the: we are you located in united states, and where are you headquartered? guest: we are a north american energy company. we are headquartered in calgary, alberta. we have offices in houston, texas, edmonton, alberta, and toronto in terms of our enbridge .ompany area -- company host: and your pipe infrastructure, where is it in the united states? where do your pipes run? guest: our pipe infrastructure, our main system, would flow from western north america, western .anada, alberta the main system would enter the u.s. in north dakota, flow across north dakota, desoto, wisconsin, michigan, indiana,
illinois, and now we have a pipeline system we are developing from the midcontinent area to the u.s. gulf coast, and that, of course, takes us right through cushing, oklahoma. host: how old are your pipelines and are you building new ones? range inr pipelines age. the first pipeline that we build on our system -- our company was -- it was built up over a series of projects over the next several decades. today.building new pipe we are building and replacing pipe in some areas. so, our system is a combination of pipes that started with the start of our company in 1950. ,ost: how do you decide where
and when, and how you are going to build a pipeline? guest: so, really, markets will drive how pipelines get tilt. in the production get built. in the u.s., you see a lot of development in the shell space. our numbers are up about 2 million barrels a day over the last two years, which is tremendous, and we are back to levels that we have not seen since the 1980's, and the projection is we are going into new production areas. that growth is driving the pipeline infrastructure and the need for more pipeline infrastructure, to make sure we provide that link out of the production areas and into the end-users. iswhat is the -- host: what the process for building a pipeline -- how do you go about construction, laws you have to follow, environmental concerns, etc.?
guest: absolutely. the environment is paramount. public safety is key. be process we follow would very much from conception identifying where does the pipeline generally need to go from and to, and then we look more specifically at routing, looking to minimize the footprint, aching sure we are putting the pipes in the right locations. a great deal of work goes into the design to safely design the system. we design everything from the mill to the steel and the steel properties, to how it is welded together, to the type of coding system that would go on it, how the pipeline is protected once it is in the ground, and then, from there, it really transitions into operations and how we monitor the system from both a control perspective -- and in the control center it is
a seven days a week, 24 hours a day operation and monitoring the we monitor also how the pipeline infrastructure and the inspections done to make sure we know what is going on with those pipeline systems as they are in operation. host: an earlier caller from michigan talked about this till there and said -- the spill there and said that it was enbridge's pipe, there was not proper procedure there and it has not been cleaned up. brad shamla, i want to give you a chance to respond. guest: there was a leak in marshall, michigan, it was an enbridge spill, and it was a significant environmental incident, and to be honest, greta, it was the worst day in our history. we took full responsibility for that spill from day one.
it was a dark day for us and also for the community and the people of marshall. we made a commitment to the people of marshall that we will not leave michigan until that spill is cleaned up, and we are there today working on that cleanup. host: how do you go about monitoring the oil and how it is ?lowing through the pipelines explain the technology, and is it adequate? do you have to have this type of safety technology in old pipelines as well as the new ones? , so, as far as the technology, it is a very sophisticated technology. the computer system, the data systems that are used, we are able to monitor the pressure in the pipelines at any given time, pumps and are coming on and off, and we have built in leak
detection systems that will monitor the flows, the amount of oil going into the pipeline system and coming out of the pipeline system for different segments to ensure that we are looking for any deviation that could signal a problem. your question as to whether we knew it in old pipes and new pipes, we absolutely do it in every pipeline that we operate, regardless of when it was built. the same technology would apply new and all of our pipeline systems, and that technology is emerging and being updated on a regular basis. host: talk about who transports oil with you. who are your clients? guest: so, we have a pretty diverse client base in terms of who ships on our system. that client base would include
producing companies, so, large companies that are producing, whether they are in north in westernken shale, canada, or in the cushing area, the producers would be one client base that we have. take spacers also and ship on our system, so the various refiners in kansas, oklahoma, texas, the u.s. gulf onst, would also be shippers our system, and finally there is a group of customers that would be the marketers or the people that would provide the commercial link between the production and the field and the end-users. those three large client races would be those that ship on our system. would be those that ship on our system. host: one is a decision made from a client -- we want to move
our oil today -- how does that work? guest: we ship on a monthly basis. we take nominations from interested parties to ship on our system on a monthly basis, and then create a monthly schedule. so, the nominations would come in. they would put their orders in, basically. we look at what we are capable of moving. we set up a schedule and that schedule applies to that given month. host: we want to get our viewers involved. canyon, how, dog small of a leak can you detect with your technology? brad shamla? brad shamla with enbridge? guest: yes. host: can you hear me, sorry? guest: yes i can. the question was on our leak
detection capabilities. our leak detection, as i said, it is technology that is emerging. our technology allows us to pick up a fairly small leak in terms of size, but the leak detection system is not our only method. we do leak detection on a regular races. ---basis. flying onweeks we are the right away -- right-of-way. host: jim on twitter wants to know, brad, are the pipelines full all of the time? guest: the pipelines are full all of the time. you do not empty a pipeline system. pipelines running various speeds, if you will, depending on the monthly schedule and the
pumping. so, we have the capability of stations in the which would slow down the flow, but generally, the pipes are full and flowing full all the time. twitter -- the technical problem with pipelines is friction loss which wears on the pipeline. guest: i am not sure as far as pipeline ande fitting. in the auto industry, oil is to not wear. our system, and we inspect and a regular frequency, so we have a good long of what is going on. ofwalt of what is -- logh
what is going on on our system. host: how you keep the oil flowing? guest: pipes along the pipeline system would propel the oil to the next pump station where it -- pushed further down the line. host: brad shamla, how much does it cost to construct a pipeline? guest: so, construction costs would very based on the region you are in. pipeline we are building from flanagan, illinois, down to cushing, here, it is a 36 inch pipeline, and the overall cost is about $2.8 billion. host: what is the most expensive part of it? guest: it is a combination. costs,e your material
the cost of steel, the steel pipes, the pumps, and all of the fittings, the cost of right-of- way, working with landowners on right-of-way, and right-of-way compensation. you have construction costs, the labor component, and the many people put to work on the pipelines installing it. host: bill in texas. republican caller. you are on the air. caller: good morning. mr. brad shamla, as i turned on this morning for c-span, i noticed that the location of cushing was decided on sometime during world war ii to keep it away from the coast, but if i were a nasty terrorist or whatever, it would seem to me , it if i had a few icbm's could not this country out in a
few seconds by releasing in a central point with so much in cushing. why have we not diversified the location? there is 20 of land as you travel around the country. we certainly -- plenty of land as you travel around the country. we should consider diversifying the locations. guest: it is a good point. cushing is a significant interconnection, but it is not the own the interconnection, and there is some redundancy built into how barrels move. on the storage piece, there is an ability in a situation where there would be problems with the tank age heard you could bypass and flow through. it is something we could do in a scenario where we needed to. it is a good point, why put all of your eggs in one basket. texas.icki in
independent caller -- virginia. independent caller. texas. independent caller. to my: this is very close house, and i find a lot of information lacking. there is a fuel pipeline going to texas right now. powerrpose is to ship san -- sand tar. the question was good about the fitting. they have to break it down with toxic chemicals. this company has a history of weeks. the process of telling where the pressure is gone, once that leaks into your water, your water is contaminated. there are many issues.
the sand tar is not going to make a big difference in our energy economic environment. there are a lot of questions and answers not been put forth to the american public. my question is when will they let us know what is coming through the pipeline and why he did not mention that the pipeline is already in construction from cushing to the coast of texas because i can see it from my house? host: all right. let's get a response. so, safety is paramount to building a pipeline system and to our operation of a pipeline system. our social license to operate is dependent on safe operation of pipeline systems, and there would be no other way to build and operate a pipeline system. we put a lot of time, effort, and energy into designing and ensuring that we are building safe pipeline systems, and to
the ongoing maintenance of that pipeline system. host: brad shamla's, what is enbridge's safety record? safety recordrall , greta, you have to look at what we do on a daily basis. delivers about 2.5 million barrels of oil per day, and over an annual basis, is a considerable amount. -- it is a considerable amount. when you look at the overall record of our company, the pipeline industry, it is very good in terms of that delivered product and providing that service. host: safer than -- we learned earlier, and we have seen reports -- safer to do it by pipe than from rail and truck. here is bill who says the cost
of shipping oil in the united states by rally is about four dollars to five dollars more expensive per barrel. is that true question mark -- true? guest: it can be higher than that based on where it is going. most efficienthe and lowest means of transportation of energy. host: how much do you charge your clients -- give us an example of how much you would charge a shipper to move their oil for them, and then store it. guest: so, that would very in terms of shippers. i do not have all of the data in terms of costs per barrel. generally, speaking -- generally speaking, it would be less than one dollar for some of the storage in cushing.
transportation through pipeline segments would depend on the amount, and it is something that is regulated, so on a cost-to- service basis, you would look at what are your requirements for power, for the capital to build the systems, and then you recover that over an extended time, 15 or 20 years. host: scott is in state college, pennsylvania. independent caller. caller: hello. host: you are on the air. go ahead. greta, andnk you, thank you, c-span, forgiving the voice of america to television. brad, my question is, first of all, is your company privately owned, or do you have a parent company such as a larger oil company, and secondarily, can i ask what your background is --
fluid transportation or public relations question mark thank you -- relations? thank you. question., very good we are a publicly traded company. the enbridge company trades in the u.s. and canada. enbridge energy partners is a limited partnership that has a different set of public owners, if you will. engineering. is in i have a civil engineering degree from the university of minnesota, and also a business degree from the university of minnesota. host: patrick, michigan. independent caller. caller: how are you doing? thank you for taking my call. host: good morning. caller: these oil pipelines were meant to ship oil, and from what i have read they are not meant to ship tar sands, and i have
also read there is an increase on the rail cars being built, and the spill that happen in marshall, michigan, they claim that it happened over land when it happened overwater. i will get off the air. thank you. -- -- brad shamla -- so, the product -- sorry, greta? host: if you wanted to respond about thishe said billion michigan, but the first part, we addressed the issue of oil being moved by rail, but on the issue of coming through canada, and dealing with it on the pipelines -- guest: yes? host: the united states has been importing tar sands from canada for 25 years, if i understand
correctly, and you are already doing it? companies like enbridge are already doing it? guest: absolutely. tar sands have been shipped safely for more than 30 years. a recent study from the national academy of science looks specifically at the properties of blended and. itis a good report, and concludes that oil sands crude is exactly that, crude oil. we move crude through the system. we do not transport sand. we move crude oil through the system, and that is part of our operation. the caller mentioned this billion michigan, saying that happened on water, and not on spill ind -- the michigan, saying that happened on water, and not on the ground. brad shamla?
guest: it occurred on the ground which flowed into the kalamazoo river, so i can understand the confusion on that point. host: nick. alexandria, virginia. independent. earlier, was listening and i heard that there was going queue. one-month long would it not be more efficient to reduce the key with the idea of the pipeline is to effectively move oil across the country? do i. -- thank you. so pipeline restrictions, or a lack of pipeline infrastructure, as we have seen, can cause some major impacts to market, so when that happens you get things like fuel prices going up at the pump, and
things like that. pipelinecking infrastructure in america. we are building that critical infrastructure to make sure we can move the production to the markets efficient way, and that efficient movement includes not having long queues or lineups. host: brad shamla, what is the near future for enbridge as we see the rise of reduction increasing in the -- production increasing in the united states? guest: it is an exciting time for our company, for our industry overall. the production overall is driving significant needs for infrastructure. we have about $26 billion in secured projects that are underway over the next two-2-3
years, and that includes pipeline infrastructure into and out of cushing, oklahoma, here. , we say thankmla you for joining us. guest: thank you, greta. host: our conversation continues, looking at cushing, oklahoma, and the role it plays in the oil industry. we want to go up to new york now, where daniel yergin is joining us. "the the author of both quest," and "the prize." you have been to cushing, oklahoma. how would you describe it? guest: you see all of the tanks, and it is quiet, and you have the oil moving at the stately rate of four miles per hour.
you realizealm, yet it is one of the notable points in the oil industry, and we see on the reports of what the oil price was, it all goes back to cushing, which has been a great gathering point, really, for about a century now. host: why does it all go back to cushing? guest: there was an oil field discovered there before the first world war and it was called the queen of the oil fields, and at one point it provided 22% of the u.s. total oil, and a lot of the oil produced by the u.s. army in europe was made in cushing, oklahoma, and the oil system was old, but the pipeline system had been set up to move supplies around, so it became the gathering point. it all flowed through cushing and went out to other pipelines, two refineries around the
country to make products like gasoline, jet fuel, and heating oil that people need. host: some have called it the capital of the american oil kingdom. would you agree with that? guest: i would say it is a very key point in the oil industry. it is funny, when it was a boom town and they were producing a lot of oil there, people said any red blooded american would catch the oil fever there, for aw it is very calm, and it is central point of gathering, really, for north american oil. host: and you are in new york. let's go back to the wall street component. businessweek" reported that each day some 900,000 oil future options and contracts are traded on the new york mercantile stock exchange and oil in cushing is what is bought and sold. why is that?
guest: when you have a futures market, as you do for oil, you need a delivery point. not everybody takes delivery. only a fraction does. you need some physical embodiment of oil, and it is the oil in cushing that is used to backup, or the reference point for the prices you have in the futures market that people trade. here, in new york, and around the world, people are trading constantly, and vast amounts of money flow back and forth, he yet it is all connected -- yet it is all connected to the oils -- barrels of oil in cushing, oklahoma. host: recently there was a glut in pushing. why is that? guest: what has happened, and this is what you are talking about before, the u.s. oil picture has changed.
in 2008, the notion was we are going to run out of oil, and since that time, all production has increased 56%. the oil is coming from new places like north dakota, more and more oil from canada, the oilsands and other parts of the country. in,ave more supply coming and our pipeline system needs to catch up with these new sources of oil. no one, five years ago, would have said that north dakota would be the second highest oil producing state in the country ahead of alaska, i have oklahoma -- a head of oklahoma. the pipelines are backed up in cushing, and any more pipelines -- the pipeline system needs to catch up with this momentous change in u.s. oil supply. because that is happening, you have seen copies like enbridge reverse their pipeline
and other companies do the same. transcanada has gone ahead with the south leg of their keystone project, and that should be up and running soon. ast will that do as far getting the oil produced to markets? guest: what used to happen is oil would come in tankers from the middle east, the refined in texas or cushing, and now, it is like a u-turn. you have this oil produced in the u.s. that has to go to the gulf coast, where half of our refining capacity is, and a lot of products like gasoline are made. the pipelines are being turned around. it is interesting that on the white house website there is a photograph of president obama standing in front of these large pipes that you referred to, which is the southern leg of the keystone xl pipeline, and he was there to encourage that to be built, so that is going ahead.
him: what do you make of going to that area, stillwater, which is very close to cushing, oklahoma -- a democratic president going there, talking about his energy policy? i think you have seen a real change from where we were when the obama administration came in, a time when this shortage view was really there, and if you go forward now, and i have found myself looking at his state of the union address, where he did not talk about oil and national gas at the beginning, and now he talks about and all of the above energy policy area everything -- policy. it reflects that he went to cushing, and a focus on jobs that are a result of this developing. it is a shift and it reflects the way our energy picture has changed rather dramatically from
what would have been expected a half decade ago. host: the president, just last week, was pitching the u.s. economy to foreign investors, saying companies are moving here and more should move here because energy prices will be lower. really interesting. during the government shutdown, he gave a press conference and he said our oil and gas production is greater than that of russia, and he said some good things are happening. i was at that press conference that the department of commerce put on, and we have gained from inexpensive natural gas. i was in europe, and you talk to businesses there, and they will not invest in europe anymore. they are in the united states, and there is over $100 billion of investments scheduled to come into the united states because we have a more favorable energy position than any of the other industrial countries. when i was in china, the chinese
were worried about competition from the united states. today, mr.e talking daniel yergin, on the anniversary of richard nixon's energy independence speech. what do you think of that? guest: there are a lot of echoes. nixon gave that speech, the company was -- country was in a panic. his administration was collapsing, too, because of watergate, and he gives a speech, just like john kennedy promised we would get a man on the moon, we will be energy independent in seven years. . .
or is that under way now forward thinking people looking at perhaps creating water pipelines for the future? thank you very much. host: i think that we know that oil pipelines and sometimes converted to carrying natural gas the direction change. i have not heard about these pipelines. doesn't strike me that's going to happen, they will be converted to carry water. obviously, water is a serious issue in some parts of the country. people will look at other ways to manage it. i don't think that's the direction we'll be going. host: about pipelines, there's a lot of debate over keystone xl and environment concerns surround that. what is the approximate life expectancy of a pipeline and how deep are these pipelines buried in the ground?
guest: i think that, we have pipelines in the country that were built in the 1950's even so going back to 1940's although they've been rebuilt over time. i don't know your previous caller would know, may be 10 feet or 15 feet. we have in the country, 182,000 miles of oil pipeline and keystone xl would add about 1% to that length. one of the things missing from the discussion is the fact that we have this very large system now that moves oil and pipelines sort of out of sight under ground except for kind of like those pipelines you were showing at the cushing. host: those pipelines have been in existence since the 50's and
that oilsands have been coming from canada. guest: the real growth has been in the last 1990's. the amount of oil just from the oilsands producing there, you have to get into perspective. that volume is greater than the volume of output from five of the opec countries. the u.s. and canada will will be really tied together in terms of energy. you look at the disruptions in the middle east and the instability there. people kind of need to keep in mind energy security too, the reliability of supplies. host: canadian government lobbying washington this week and the washington post taking out a half page ad canada, canada america's largest oil supplier united states brings
them more from canada. david is waiting to talk to you -- guest: that is interesting. i think i found recent years people assume that all of our oil imports comes from the middle east. but canada is by far our largers supplier. host: david from louisiana, democratic caller. caller: i like to make a comment. in regarding to ethanol, this is a really disastrous thing. few mileage decrease to almost 15 to 20 percent. i happen to be lucky in my area. i have access to non-ethanol fuel. i can put the ethanol in and get
the 22 miles but if i put in the non-ethanol, i get 26 to 28 miles per gallon. the toll that it's taking on the land to grow the corn, to make this ethanol you're depleting your soil. a possibility down the road of having to use this land to grow some sustainable crops and edible crops. that's my comment, thank you. guest: greta? yes, okay. you know, the requirements for using ethanol were really put in back in the early part of the beginning of the century, 2007 when there was great fear of shortage. obviously, it's had a lot of support from farm states. the pluses are that it's brought income into those areas. it kept young people in the area
but it also has its cost. about half of our corn crop goes to ethanol. as the caller pointed out, you do get less mile all from it. in terms of its impact, it's somewhat less. if you pull into a gas station, you'll look and you'll normally say 10% of gasoline is actually ethanol. host: are you for all of the above strategy in we heard from the president. we continue with our production of oil and natural gas but we also continue incentives for alternative energy? guest: yes, i think all of the above strategy is the right way to go because we have a big diversified economy. there's not a single solution to do. i think it's been very beneficial that happened to our economy, this unconventional and gas revolution, has created
something over two million jobs last year and it increased household disposable income by about $1200. at the same time i think the renewables, the alternatives are very important. part of the mix for the future. wind is now 5% of our electricity. you mentioned that conference where president obama spoke last week, i chaired the energy panel there and it was someone from the white house who talked about all of the above energy policy and really occurred to me that we have in the united states now with other countries don't have, which is all of the above energy opportunity. that's a good thing for our economy. we have to continue the research. thinking not only about tomorrow but thinking about five, 10, 20 years from now. host: today on "washington journal," we're focusing on the oil side of the energy sector, taking a look at cushing, oklahoma, introducing you to
that town. a town of 8000 with the capacity to hold nearly 80 million barrels of oil. it's the largest storage felt in our country. tomorrow on the "washington journal," our whole program will be looking at alternative energy, solar, wind and other sources of alternative energy. patrick in granite bay, california, republican caller. you're up next, go ahead. caller: my name is patrick, how are you? guest: fine, thank you. host: go ahead please. caller: how are you sir? guest: okay. caller: i have a question regarding oil and alternative energy. when t. boone pickens came out -- what do we do with all of
this oil? if we do put it in a pipeline. it's going to go out of our country. even if we have all the oil in the world, we can only refine so much. what is the end game? guest: the end game, i think is a long game. we're not short of refining capacity in the united states. one reason we're not short of refining capacity is because not only are we producing more but our demand our consumption gone down because of efficient automobiles. to just give you another example, if i can, we were mentioning before about president nixon project independence. since he gave that speech and sense the oil crisis, our economy has tripled and our oil consumption a 7% higher . california is a particular case because it's very hard to build
anything in california. even to build a solar farm can be very controversial. so california has refineries there that have been there historically and then bring its oil elsewhere. california has higher gasoline prices than other parts of the country because of the various restrictions that are there. shortage refinery capacity used to look like a big issue because of the change in the market is not a big issue as it was before. california is the third or fourth largest oil producer in the united states. now by rail car, additional crude oil comes into the state and goes to those refineries still there and ends up in the gas tanks of motorist. host: chuck tweets this. we need high tax of exports of refined oil products.
guest: i don't understand what the purpose of that would be except to tax us out of the market. refining is a matter of factory business. we still import lot more oil than we export. the exports we do, you take a barrel of oil and you put it through a refinery system, you end up with a lot of different products. some of it like gasoline, we use a lot of it. others like fuel oil, we don't use much anymore because we don't put oil into electricity generation anymore. you export some of your products as well and that's an income that flows back to the united states. i think what we don't want to do is make ourselves uncompetitive. if i can say the economy, we're benefiting. the economy in terms our g.d.p. and government revenues is benefiting from what's happening in the energy sector.
unconventional oil and gas growth, generated we calculated $74 billion of government revenues last year from the normal taxes that people pay. host: greg is next in missouri, independent caller. caller: good morning greta and daniel. i want to ask you, how difficult is it to build oil refineries in the u.s. and why are most of them on the gulf coast? guest: most of them on the gulf coast because that has been the great center of really the oil and gas industry. there's historic basis of it going back to the development of texas and the oklahoma oil fields. we were importing a lot of oil. the crude oil would arrive on the gulf coast and be refined and sent out to the country. katrina and rita hurricanes hit, dallas airport in washington, ran out of jet fuel because that
jet fuel was being refined in the gulf coast and sent up. if you're in texas, i think you can expand a refinery. there's a big project, there's a $10 billion project to upgrade one refinery. to get a permit in most places to build a new refinery, even it it made sense, would be a very lengthy regulatory process. host: joy in california, democratic caller. caller: good morning. past years, we talk about energy independence. i am all for drilling oil here in the united states if it stayed in the united states.
we didn't put -- we ship it and then it goes to opec and that we're not really benefiting from it. then we build the refineries of pipelines, those are temporary. i feel the same way about nuclear. if we're going to -- i'm originally from nevada, and close to yucca mountain, if you want a nuclear power plant, your state stores the waste. i just don't see correlation between the prices, the more oil we drill, doesn't necessarily mean the prices that we pay at the pump are lower. guest: that's a lot of questions.
let me say that i think that if the u.s. has not seen increase in oil production that we're seeing today, we would be looking at much higher gasoline prices, we would be talking about a new oil crisis because you have to look outside the united states. you look at north africa, you look at libya, you look at nigeria and west africa. you look at iraq and number of countries in fact, there's a disruption that's going on in world oil supply and the growth of u.s. supplies helped to balance that out. think we would be looking -- people would be talking and complaining about much higher prices at the pump had we not seen this additional supply, which made us more secure. we do export some product that is crude oil after its gone through the refineries, it doesn't go to opec, it goes to countries like brazil. one of the products you make when you turn that oil into
crude oil and different products is diesel. we don't use so much diesel as europe. we export diesel fuel to europe. it kind of all balances out. primarily, the oil that we refine in this country is used in this country. the nuclear thing, that opens up a whole other question. nuclear is about 20% of our electricity today so it's one of the sort foundations of our electric supply. host: on this issue of energy security, sense the u.s. already has energy security, where does this pipe oil go? guest: well, if there's a disruption in the world market, say we didn't have this oil, even though the disruption is in some other part of the world. at the end of the day, there's only one world oil market, and
that world oil market prices back to cushing. we still import 35% of our oil today. we're not self-sufficient. where does the oil go? it goes into people's gasoline tanks in their cars. it goes into jet planes that fly people, it goes into shipping. oil is primarily these days, more than anything else used as a transportation fuel. host: how much is used for plastics? guest: i don't know that number. that reminds me of the scene in the movie, the graduate, with plastics. chemicals are also made from natural gas.
one reason we're getting over $100 billion of new investment coming into the united states is the chemical companies coming, it convert bundle supplies of natural gas we have now into chemicals and plastics. host: carl in fredericksburg, virginia, independent caller. caller: i have two comments. there's a wonderful documentary on fracking. they filed in upstate new york where 15 million people get their water. the fracturing was sold on tv and commercials. i think that's number one problem. number two is that the oil industry, if you go back, wherever the time line is to where we were paying $28 a barrel to the saudis, we raised it so much they were upset. our oil companies went in and
made a deal but they would give them half the additional profit. our oil prices should be down to half of what it is today. we shouldn't be exporting anything. we should take care of that and replace it because it's polluting the whole nation. guest: well, several different points. first on the water. the hydraulic fracturing even in the state of texas, is less than one percent of the total water use that's there. it may surprise you to know that the production and drilling of natural gas and oil is actually a highly regulated activity, much of it regulated by state and if there's a spill or surface spill or something, there are penalties there. so far, i was on the commission that president obama had set up to look at the environmental issues around shell gas and the conclusion of the sciences on
the commission is that it's industrial activity that needs to be managed. it doesn't fit at all what you describe. there is no shell gas development in the state of new york. although there is next door in pennsylvania. i don't think your facts are correct on oil prices about 50/50. most countries, first of all, u.s. old companies don't produce in many of the middle east countries like to saudi arabiaians. secondly where countries do produce, approximately 80 to 85 percent of every dollar of revenue goes to the host government. and 15 or 20 percent will go to the oil companies that develop it. that's the current standard in the world. host: democrat on twitter wants
to ask about natural gas. i would like to know why the price of natural gas in my home is going up? guest: i don't know why that's happening either. i don't know what part of the country you're in. most natural gas bills are going down. also electricity bills are going down when the electricity is made with natural gas. i think it's a puzzle that your prices are going up. one reason, increased disposable income for households, they're spending less to heat their homes with natural gas. i don't know. better look at that bill carefully. host: we'll go to michael, charlotte, north carolina, republican caller. caller: before i get to my point about ethanol, i want to report to you, i go on a website called gasbuddy.com. i was a mile from the south carolina border. i can buy a gallon of gas for $2.98 and two miles up in north
carolina, it's $3.33 a gallon. it reports that missouri is the cheapest place in the country to buy gas at $2.87 a gallon. guest: are you filling up your car everyday? caller: , no i like to follow the trend and see what's happening. guest: you're doing a lot of driving. caller: no, it takes two seconds and it's a great little website. people report and you can basically go to almost any intersection in the united states to find it. guest: internet made pricing more transparent. caller: exactly. you mentioned the loss of miles per gallon with regard to ethanol. what i don't think -- the part you should have finished with, respectively, the fact that usage and reduction in miles per gallon, actually based upon pricing of a gallon of gas is what you have to make up and
also the fact that you lose about 15 to 18 or percent of miles per gallon. you're getting less mileage with the 10% ethanol. thus you're in effect using more oil as over all consumption because you have to make up that miles per gallon by using more gasoline. the other interesting thing you might want to check into is, what is the cap based upon a gallon of gasoline that's hundred percent oil or gasoline or it's in the 90/10. if it's the the 90/10 mix, it changes the whole equation. guest: ethanol is 10% of your total every gallon 10% is ethanol. i don't think the mileage loss would be that great. the mileage loss, i think with
that 10% you cite. first of all, i love this stuff about gas buddy. that's terrific. i think the other point the legislation that was put into effect says that in fact, we start to have to use more ethanol or biofuels. volumes has to increase. this is a big problem for two reasons. one because our gasoline consumption is a lot elower than people thought it will be in 2005 and 2007 when legislation was passed. and two, it was passed in the view not only we would leapfrog over ethanol to what was considered the break through, ethanol not made from corn or made from waste products. it turned out that has not --
those products are not there yet. legislation was passed. you have to use something in your car that doesn't exist. i think one of the things that both the administration and the congress will have to wrestle is to change the law so it becomes more realistic and doesn't try and push ethanol that doesn't exist yet and require that it be used. this will distort the gasoline markets. host: let me get in mary a republican caller. caller: i like to know about the penalty phase. the drillers, the drill wells and they skip that, why aren't they held more responsible for the damage that they do to farms because i got a humongous mess out here. i had oil in the creeks since 2011. why aren't the drillers -- i
don't have my rights yet, why aren't the people that rent the property that drill for oil? there's so many pipes in my ground, you couldn't plow a field. host: what about accountability? guest: kind of get the facts on the table. is this something recent? are they drilling on your property? host: i apologize, i let her go because we're running out of time with you mr. yergin. guest: i can't talk about the specifics. if you're looking at western pennsylvania, they tossed regulatory systems and most states have it. i don't know the specifics of that case. if that's what they've done, they're responsible and they should pay not only to fix it, they should pay the penalty and
the fines levied. host: mr. yergin, two different headlines. this from the "washington journal," u.s. refiners don't care if keystone xl gets built. you have this from the washington times this week, last week, both sides on keystone agree that obama must act because this is going to be part of his legacy. guest: wow. that's true. refiners do care. you do have these large volumes. what's going to happen, if keystone isn't built, this oil will come into the united states by rail car. it's just dramatically increased. the pipeline is a simpler way to do it. they're bringing in oil and sort of seem like something john d. rockefeller would have been done. it becomes the modern way.
the keystone xl has become a symbol that is far greater than the actual pipeline. this is the most famous pipeline in the world that hasn't yet been build. if we don't use the canadian oilsands, we'll import oil from venezuela which has the same carbon footprint. it looks like there may be some clarification. this is not only question of legacy but it's a very long running drama. host: daniel yergin author of the quest. thank you sir for your time. our conversation continues here on the "washington journal." taking a looking a look at the oil industry. specifically in cushing, oklahoma. 13 companies operate crude companies for the legislative side of this conversation, we're going to go. to capitol hill where senators
james inhofe is joining us to talk about cushing, oklahoma. let me begin first with your health. you returned to washington after under going quadruple bypass surgery. guest: i discovered i didn't have clogged arteries. i would encourage people to get an m.r.i. and check up. i had to do four bypasses. now it's great. i feel good and i'm back on the job and now i realize i was more restricted than i was. once you check in, you don't have this instance to fiend out. i'm working with the heart association to help them to encourage people. i went in for a colonoscopy,
they said your colon is fine. anyway, thank you for your concern and i'm back on the job. host: while you were gone, , you missed some fun. the government shut down. were you watching at home on how this place works? guest: you know, you see it as real people see it. i was watching. quite frankly it looked so foolish. they're arguing back and forth. egot phone calls from different members. orin hatch called me up. i was in the hospital. he said stay there, you're not missing neg. we went through this thing. i looked at it as an outsider would, i think i have a better perspective of some times how foolish we in washington look the way we're handling business. host: let's get to our
conversation here. we've been focusing on cushing, oklahoma in your home state. a place where 300 farm tanks got the land. one tank can hold up to 500 plus barrels of oil. it's the largest storage facility in the country. what does it mean for the state of oklahoma? guest: the capacity, greta, to store 80 million. it's incredible what they can do there. it is clearly the crossroads of all the pipelines going in and out. what does it mean to us? there are about 8000 people in the town of cushing. if we can get this thing moving and the president had not stopped what was happening with the keystone pipeline coming in from the north, it would be about another 8000 people would be employed as we speak. we are in pretty good shape in oklahoma. i appreciate you covering this issue. the big problem here is, we have
a president who's had a war on fossil fuel and the pipeline is just a small part of that. we're in a position right now where we can have tremendous advances in our economy. just look at oklahoma, texas, north dakota, we average about 4% unemployment rate. we need to go ahead and develop those resources that we have. while we've had this tremendous boost of some increase of 40% in our shell, that which is controlled by the federal government, actually had a reduction of 10%. it shows what we could do if we would open up and start developing resources. by the way, i have to correct the previous person who was on, the cheapest gas is not in missouri. it happens to be in oklahoma. it's $2.75 this morning. host: on keystone, i showed
this headline to daniel yergin. u.s. refiners don't care if keystone gets built that's because railroads are carrying amounts of crude from canada down to the refineries reducing the need for the transcanada corporation project which is still awaiting approval for the u.s. government. a rival pipeline is expanding existing pipes to carry canadian crude and it doesn't feed federal permission because it's existing pipelines right aways. guest: you have to remember, when president obama came to cushing, oklahoma, he wasn't very well received at that time. to announce to him he would not stand in the way of the pipeline going to the south, we all know. he couldn't stop that. that didn't cross any international boundaries as it does coming down from alberta. there are other ways to moving it around, the most efficient way is through pipeline.
i'm not an expert, i know if you're going to be moving oil, the cheapest way to do it is pipeline. the only objection -- some people have to look at the big picture and say why in the world would anyone object to a pipeline bringing the oil down through the united states? they try to say, well, we don't them to continue to go through the tar sands up in alberta. they are doing that anyway. their market, otherwise, is going to be china and not the united states where we would have the economic benefits of it. this is a win-win situation. if you believe, which i don't that you're damaging the environment when you're developing oil and gas, then even if you believe that, it's going to happen anyway because they're doing it and we can't control that. let's take advantage of this.
to me, this relentless war on fossil fuel and the president had and things he tried to do. for example, how many people five years ago even knew who hydraulic fracturing is. this is something if it works for horizontal drilling and for hydraulic fracturing, we wouldn't be in this boom we're in now. let's get government out of the way and allow everyone to have the benefit of the opportunities we have in the development of fossil fuels. by the way, on the issue i heard you talking to previous caller about ethanol. that was something incidentally have nothing to do with partisan politics. most things are partisan. this is not. just geographic. i hate to say it.
we're also a corn state but now people realize that ethanol is worse on the environment. it's worse on your car, mechanically. it's something that is -- all the arguments for it are gone now. host: what about the environmental concerns. the president said that it must not increase co2 emissions that it must be neutral. environmental groups say a draft report by the state department that it's pending because it does not consider the impact alberta sand oilsand cruise. those group -- guest: i'm a conservative republican. i look back in the days when the financial backing of the
democrat in washington were the labor unions, the trial lawyers. now it's the far left environmentalists. it's the move on.org, george soros and michael moore. we're talking about moving this to pipeline. you don't get the exposure outside find it's something that is bad. the most recent things we have had have shocked a lot of people, for example, now they're saying that the artic increased by 60% over the past short period of time when they said it was going to completely melt away. we now realize that co2 is helpful in the growth of trees and production of water. this whole thing has been something that has been used by the far left and of course obama, that's where he's coming
from. he feels he has an obligation. you will hear a lot of this stuff in the case of hydrolic fracturing. we had hearing yesterday on ethane emissions. hydraulic fracturing is not the villain. if they can kill hydraulic fracturing, they can kill a lot of fossil fuel and that's their goal. who suffers for that, that's the economy and the american people. if you look at the marcellus change, you're talking about new york and pennsylvania, they could all be benefiting right now. the same as we are benefiting in the states where i mentioned. they can sit around and talk about the footprint of co2,
that's still an area where the science is not settled in terms of global warming, climate change. by the way, if you don't believe that, read my book, greatest hopes. host: we are going to get the other voice here on the "washington journal" tomorrow. we'll talking to environmentalists as well as alternative energy companies about what they are doing when it comes to solar, wind and etcetera. we're talking with senator james inhofe joining us from capitol hill this morning because the senate is in session this week. the house is out and the senator here talk to us for a few more minutes. senator, if i could ask you about oil spills in this country. that's a great concern that we've heard about pipeline leaks in our country. we've been focusing on cushing, oklahoma and the pipelines that come into that city. lot of our viewers call up about
pipeline regulations. do they need to be updated to retrofit old pipelines? guest: we're trying to understand what you said. our reception here is not very good. would you repeat what you want to ask me? host: i was asking about pipeline regulations. are they adequate? guest: yes. on regulation, it is. the regulation historically, the pipeline is primary for safety purposes. we have not had the accidents we had in the early stages. the regulation has been adequate. i would discourage further regulation. that got passed on to those of us who are consuming the products. host: senator jim inhofe republican of oklahoma sir. we thank you for your time and wish you great health and hope that you improve as you go along
here. guest: thank you so much. host: we continue our conversation about cushing, oklahoma. our camera is live there from the terminal. that state where the tank farms got the land. there are over 300. they have the capacity to store nearly 80 million barrels of oil. they have self-dubbed themselves the pipe lean crossroads of the world. we'll take your phone calls on all of that here coming up. we had asked transcanada to join us. in the meantime, we spoke recently with transcanada when we were in cushing, oklahoma back in september and asked about the keystone xl pipeline. also this debate over how many jobs it will create. >> well, i think the actual number that for xl in the
northern lake is not 20,000. that's the entire direct and indirect job number. i'm just talking about direct jobs for construction. we estimated about 4000 northern lake is something like 7000 jobs. that's a big project. that's a very beg project. if you talk to not far from here in tulsa, pipeliners, local 798, will tell you they're unemployment numbers for their members is pretty high. a project like the southern like and gulf coast and keystone xl, its very important to those folks. >> when building a pipeline you have to work with the unions and the union wages? >> yes. we've got a project labor agreement, p .l.a. with them. this is a very important job for unions and their members. >> there's also environmental concerns with moving oilsand from canada through pipeline
through the united states. how are you addressing those concerns? >> one of the first things to say in that regard the 57 additional conditions that transcanada agreed to with the federal government regarding design, construction and operation of the pipeline. not just for the southern leg, not just for keystone xl but for the keystone pipeline system. those conditions go above and beyond what's in the books now. no pipeline in the united states has to meet those conditions. we've already been doing it for the last two or three years for the first two segments keystone has been in operation and performing well. those standards, the bar was pretty high to begin with. we raised the bar in terms of design and construction and engineering of keystone xl. >> talk about the oilsand from